The fallout could weaken the government's finances, requiring a
budget tightening of as much as £39 billion ($50.8 billion) in a
worst-case scenario, adding two years onto policies of austerity,
the Institute for Fiscal Studies said in a report on Wednesday.

Before Brexit, the Office for Budget Responsibility (OBR)
estimated the UK would have a £10.4 billion surplus in 2020.

But this could fall to a £28 billion deficit if the UK fails to
negotiate a decent free trade agreement with the EU, according to
the IFS report.

No trade agreement can come close to replicating the
effect of membership of the EU Single
Market, which has allowed the UK to sell its goods and
services to the EU without trade barriers.

Even with a free trade agreement in a best-case scenario, the UK
is looking at a £24 billion reduction in tax revenue by 2020 and
£14 billion deficit, the IFS said.

The EU is the biggest consumer of UK exports,
representing an in-flow of almost £90 billion. It
accounts for 40% of services exports, such as financial and legal
services, whereas emerging economies such as Brazil, Russia,
India and China together account for less than 5%.

Here is the chart:

Institute for Fiscal Studies

The effect on the economy is already starting to be felt. The
number of new available jobs in the the UK's financial centre
fell 12% from June to July to just under 8,000, according to a
survey by Morgan McKinley.

Year-on-year the number of City jobs plunged 27% while the
number of people seeking them dropped 13%, the report said.